WHAT EXACTLY ARE WE SELLING: TIME OR SKILL?

I walked past the Firm’s legal secretary as he angrily punched the keys on his computer keyboard, and even though I had compassion on the keyboard, I would not have stopped if I had not seen my name being typed:

“Kayoto is an Associate in the Firm. He is a graduate of the Otukpo State University of Science & Technology. His areas of expertise include Bankruptcy, Banking & Finance, Competition, Project Finance, Corporate Restructuring, Arbitration & Dispute Resolution, Capital Markets, Telecommunications, Mergers & Acquisitions, Energy and Natural Resources, General corporate commercial practice, Real Estate, Taxation, Private Equity, Business Regulatory and Advisory. He has advised on various syndicated loan, debt capital markets, derivatives, re-purchase, structured finance, corporate and capital market offerings, debt restructuring transactions as well as reorganization of businesses to comply with Nigerian Content Legislation.”

Haba!!! Even I, Kayoto Mioleforibale, Esq could never have attempted to ascribe such wealth of knowledge and experience to myself. From further enquiries, I have discovered that indeed, contemporary lawyers have become increasingly creative in making a handsome living off clients and one of the “tokunbo” strategies imported from other commonwealth jurisdictions is Time Billing.

Time billing refers to the practice of requesting payment from a Client for each hour spent by the lawyers attending to the Client’s matter at an agreed fee per hour. The concept of billable hours was introduced in the United Kingdom in the 1950’s but nearly all commercial law firms now make their money by billing clients by the hour. The more hours billed, the more money the firm will make. From the client’s perspective however, the consequences of time billing can be absurd. While some lawyers’ bill for time not spent on the Client’s matter, some others bill for outrageous items.

My neighbor, Alhaji Yankuli for instance, a Lagos based businessman, received his bill from Mainstreet Barristers and Solicitors last week and was startled at the bill for simply obtaining a court order to appoint new directors to his company. He demanded for a breakdown of the costs and a time sheet was provided. Item 27 on the time sheet prepared by the lawyers read:

“I was walking down the street and saw you on the other side. I crossed the road and walked quickly to catch up with you. I got close enough and realized it was not you – USD 60”

What are we selling? Are we being paid for spending time or for application of our acquired legal knowledge and skills?

With tremendous excitement as an aspiring law firm principal, I admit that the ridiculous over-pricing of services by lawyers in metropolitan law firms has been largely advanced by the culture of time billing. As a potential client however, I realize that sooner or later, lawyers may begin to levy charges on clients for merely saving Client’s phone numbers on their mobile phones. As important as time billing may be in assisting lawyers to obtain value for time, the demerit if not critically managed, may far outweigh the benefits. Indeed, one cardinal benefit of time tracking is accurate client billing, but while billing for time spent on a client’s matter could aid the lawyer in billing correctly, it is imperative that the lawyer spends the said time judiciously in the Client’s interest. Charging too much for a job that was unimpressively done will never endear the lawyer to the client. Fundamentally, the demerit of time billing lies in the opportunity afforded a lawyer to “cheat” the client and one of the ways of doing this is by “padding” the bill. While commercial minded lawyers are now more intelligent than to bill a client for 26 hours a day, some litigation lawyer lawyers may still calculate 45 minutes as one hour and 95 minutes as two hours. Exorbitant per-hour rate of professional fees is another rip-off mechanism deployed by some lawyers while the more courageous lawyers characterize as disbursements, expenses that were not incurred on the client’s matter. In a similar notorious way, many lawyers bill different clients for the same time spent on work for only one of the clients while some other lawyers bill clients for overhead costs such as over-time payment to employees or administrative costs such as diesel for the generator. In the long run, clients may eventually be compelled to pay more than a triple of reasonable fees for the same service. Little wonder why law firms perpetually have extensive schedule of receivables from clients who are either unwilling or unable to pay.

Irrespective of all the above, time billing remains highly recommended for development of the legal profession. Some of the indices that are typically considered in determining the rates per law firm include the prominence of the lawyer, the difficulty or complexity of the case, the geographical location of the law firm, overhead costs, outcome of the matter, time spent and volume of work done, legal opinion, etc. Worthy of note however, is the understanding that other traditional billing modes such as retainers, flat rates and contingency fees cannot be phased out due to the significance of each mode to clients as well as lawyers. For instance, while hourly rates may be inappropriate for drafting a simple tenancy agreement, a flat fee may be recommended. Retainers are also important for nurturing relationships with clients irrespective of the amount of time or volume of work done on the particular client representation.

Notwithstanding the above, clients should only be made to pay for value added, and value can never be given if not had. While I may have been able to make the required research to express my opinions in this piece about the modes of billing in legal practice, such research will not qualify me to provide legal representation to a client on any of the plethora of areas of expertise bestowed on me by my firm in its profile write-up.

In summary, the role of lawyers in the contemporary commercial marketplace should be to advise companies and corporate officers on their legal rights and obligations as well as ensuring compliance of commercial transactions to applicable laws. It could also be the practical application of abstract legal theories and initiate, advocate, defend, enforce or advance the interests of a client over a dispute in a law court. Summarily, a lawyer is paid to solve problems or create them, as the case may be. A lawyer is not expected to become the problem of the client.